A company that was to be liquidated had the following liabilities: Income Taxes
ID: 2459964 • Letter: A
Question
A company that was to be liquidated had the following liabilities:
Income Taxes $ 10,000 Notes
Payable secured by land 100,000
Accounts Payable 50,000
Salaries Payable ($12,000 for Employee #1 and $2,000 for Employee #2) 14,000
Administrative expenses for liquidation 20,000
The company had the following assets: Book Value Fair Value
Current Assets $100,000 95,000
Land 50,000 75,000
Building 150,000 200,000
Total liabilities with priority are calculated to be what amount?
A) $ 19,000.
B) $ 37,950.
C) $ 43,725.
D) $ 44,000.
Explanation / Answer
Answer D. $44000 Salaries Payable Employee#1 12,000 Employee#2 2,000 Admn. Exp For Liquidation 20,000 Income Tax Payble 10,000 Total Liabilities 44,000
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